Partnership aims to drive financing for climate-friendly projects and facilitate Cambodia’s transition to a green economy
The National Bank of Cambodia (NBC) and the International Finance Corporation (IFC) have entered into a cooperation agreement to enhance the availability of funding for climate-friendly initiatives and support Cambodia’s shift toward a sustainable, green economy. This partnership, detailed in a joint press statement, highlights the commitment of both organizations to address the pressing issues associated with climate change.
According to the statement, Cambodia currently ranks 62nd out of 191 countries on the 2022 Inform Risk Index, a global assessment that evaluates risks related to humanitarian crises and natural disasters. The country is particularly vulnerable to the adverse effects of climate change, with the frequency and intensity of both flooding and droughts exacerbating over time.
A World Bank report warns that without proper adaptation and mitigation strategies, Cambodia’s gross domestic product could be at risk of a significant decline, amounting to up to 9 percent by 2050. Additionally, the poverty rate is projected to increase by as much as six percentage points by 2040. To counter these potential consequences, the report suggests that Cambodia would require an estimated additional investment of up to $36 billion from both the public and private sectors over the next 30 years to achieve its climate objectives, including carbon neutrality by 2050.
Acknowledging the role of the financial sector in driving climate-friendly projects, Yim Leat, the NBC’s Deputy Governor, emphasizes the importance of implementing appropriate policies and creating an enabling environment. Moreover, he expresses the NBC’s commitment to developing a robust green finance policy framework that will facilitate a supportive financial ecosystem, attracting and incentivizing investments in green projects aligned with the government’s climate ambitions as outlined in the Nationally Determined Contribution under the Paris agreement.
One of the key objectives of this partnership is to strengthen the regulatory framework. In line with best international practices, a national taxonomy will be established, providing clear guidelines for identifying green assets that qualify for investment in climate-friendly initiatives. The development of this taxonomy will contribute to the promotion of a strong green finance market and further Cambodia’s ambitious plans to address climate risks.
Asad Yaqub, the IFC Resident Representative for Cambodia, highlights the significance of this agreement, highlighting its support for Cambodia’s climate goals. Yaqub emphasizes the potential of this collaboration to foster a sustainable and resilient future for the country.
Supported by the Facility for Investment Climate Advisory Services, the project is expected to be implemented over a span of three years, with the completion of the national taxonomy slated for 2025. This collaborative effort is poised to lay a solid foundation for channeling investments into climate-friendly projects and driving the nation’s sustainable development agenda.
Source: Khmer Times